View Full Version : How many deliveries will it take to default the COMEX silver?

23rd October 2008, 02:57
According to the comex website:

Registered 83,543,235
Eligible 49,360,950
Total 132,904,185

(in Ounces)

There are 49,360,950 ounces left to take.

As of the last COT report there are approx 98,000 OI.


and each contract represents 5,000oz

So, just 9,872 contracts to take delivery would default the comex.

Or just about 10% of the existing OI.

In the futures world, typically only 2-3% of the actual contracts take delivery. That's how JP morgan and the manipulators are able to supress prices, they know that only 2-3% take delivery, so they can just swamp the market with soooo many more short sales.

If the average 2-3% take delivery, that gives us on the HIGH side about
7,892 contracts (approx) to do it.

Now it's a question of how many people out there have long positions.

I mean besides the non-commercials, how many non reportable traders are there, and what's the average position size?

Anybody know?

23rd October 2008, 03:02
by Bob Coleman www.silverbearcafe.com

To Mr. Chilton,
Commissioner, CFTC
Ms. Troyke,
Director and Associate General Counsel,
Market Regulation,
CME Group:

In full and proper disclosure, I would like to ask the CME/COMEX and CFTC the following question regarding monthly delivery of silver.

I manage a physical gold and silver bullion fund. In order to stay within the "Model State Commodity Code" of many states, an exempt transaction by the purchaser (in this case the Dollars and Sense Growth Fund) must abide by the following code:

A commodity contract for the purchase of one or more precious metals which requires, and under which the purchaser receives, within seven to twenty-eight calendar days (varies depending on the state) from the payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased by such payment, provided that, for purposes of this paragraph, physical delivery shall be deemed to have occurred if, within such 7 to 28 day period (varies depending on the state), such quantity of precious metals purchased by such payment is delivered whether in specifically segregated or fungible bulk form.

In this environment, it has become very difficult and expensive to buy physical silver from the physical dealer market. The difference in paper prices on the Comex and the physical dealer market have widened considerably. In addition, the overwhelming demand for silver has created delivery time delays of up to 4 months. These delivery delays create a direct violation with many Model State Commodity Codes.

My research has led me to the conclusion that it is much more effective and cost efficient to buy silver directly from the COMEX and take full delivery. The spot prices are much cheaper than the dealer market and the CFTC along with the CME/Comex have stated in reports there are ample supplies of silver available for delivery with no market inhibitions. For an individual or institution wanting to accumulate a position, these are ideal market conditions.

The question I have is this:

I would like to buy and take physical delivery of 1 to 5 million ounces of silver a month on a consistent basis. I am not interested in holding warehouse receipts but taking actual physical delivery from your approved depositories/warehouses. Would there be any obstacles or resistence from either the CME Group/COMEX or the CFTC when I begin to implement or during the ongoing process of this strategy?

I look forward to your reply.

Bob Coleman

Bob Coleman
Mission Statement My mission is to provide individuals the ability and resources to decide what is best for them rather than what is best for others. Understanding and educating clients will build a stronger relationship. The power of change to a more honest environment will not come from one individual fighting against the crowd but teaching the crowd to recognize the issues and plan accordingly. Offering clients the highest level of service that exceeds the standards of any leading investment firm and exercising the vision and expertise that I have developed makes me uniquely suited to carry out my client’s investment goals in this dynamic economic environment.

23rd October 2008, 03:11
That's only if you believe their figures. These are the same guys who are selling things that can't be delivered on in 90% of cases, by their own admission. Why believe anything they say?

The default will come when they don't deliver . . . and that could be anytime. Unless they change the laws first.

I just can't see JP Morgan et al. giving up control of these assets in times like these, just because punters suddenly want to take delivery. It's a battle for survival out there and they will do what they must.

This is the risk that Jason Hommel is facing playing the spread between the Comex price and the free market price. They can always just change the rules.